Apple's stock declined roughly 2% on Monday after Jefferies downgraded the shares, pointing to concerns that the company's rumored all-glass iPhone has been shelved. The move raises fresh questions about Apple's ability to sustain premium pricing as memory costs climb.
Jefferies analyst Edison Lee lowered his rating on Apple to Underperform from Hold and cut his price target to $263.66 from $285.56, making it one of the lowest targets on Wall Street. The downgrade comes even though Apple shares have gained more than 15% so far in 2026, though momentum has cooled following the company's latest quarterly earnings report, which triggered a sharp selloff.
Premium iPhone strategy faces setback
Lee based his downgrade on supply chain checks suggesting Apple has halted development of its all-glass iPhone due to low manufacturing yields. Although Apple never officially confirmed the product, reports had indicated the device could debut in 2027 to mark the iPhone's 20th anniversary. Apple also filed a patent application for a "six-sided glass enclosure" in 2019.
Lee said the cancellation could limit Apple's ability to increase average selling prices at a time when memory costs are rising. "More importantly, we believe the plan was to extend the all-glass features to future iPhone Pro and Pro Max models, further raising their average selling price and margin," he wrote.
The analyst also expressed caution over Apple's artificial intelligence strategy, noting that the slower rollout of Apple Intelligence makes it harder to justify the higher memory requirements needed for on-device AI features.
Apple pushes ahead with hardware and AI initiatives
Despite the downgrade, Apple continues to develop new hardware products ahead of John Ternus officially taking over as chief executive next month. According to a Bloomberg report, the company is working on a screenless fitness band similar to the Whoop device while also evaluating products with different display formats, including round screens and devices without displays.
The company's first foldable iPhone is also expected to launch in September, representing the most significant iPhone hardware redesign in nearly two decades. Apple recently issued a weaker-than-expected outlook despite reporting solid fiscal third-quarter results. The company has also faced higher memory costs and increased prices for Macs, iPads, and Apple Watches while keeping iPhone pricing unchanged.
China strategy broadens across chips and AI
Apple is also expanding its strategy in China through both hardware sourcing and AI partnerships. According to a Wall Street Journal report, the company has been testing memory chips from Chinese manufacturer CXMT for products including iPhones and MacBooks sold in China, as it seeks to address component shortages linked to AI-driven demand. CXMT is not currently listed on the US Commerce Department's Entity List, although it remains subject to other US restrictions.
Separately, Apple has introduced support allowing eligible Mac users in mainland China to connect Alibaba's Qwen AI models with Siri and Writing Tools. The move follows Apple's partnership with Alibaba announced last year and is aimed at strengthening its position in China's growing AI PC market.
For more context on Apple's recent challenges, see Apple's $5T peak to 10% crash and Apple's China revenue miss. Additionally, Apple's leasing plan could help offset potential price increases.
This article is for informational purposes only and does not constitute financial advice.
